The regulatory framework applicable to both online and land-based gaming in Malta is consolidated into the Gaming Act (Chapter 583 of the Laws of Malta – "the Gaming Act"), and Subsidiary Legislation 583.01 to 583.12, adopted under that law. The Subsidiary Legislation addresses various aspects of gaming operations, such as the protection of players, minors and vulnerable persons, the requirements and procedures to obtain a licence, gaming licence fees, gaming taxes, compliance and enforcement, sanctions for any breaches, and the establishment of a responsible gaming fund, amongst others.
In addition to the legislative overhaul and consolidation undertaken in 2018, the Malta Gaming Authority ("MGA") periodically issues directives, which are binding on licensees, providing additional guidance to operators in relation to the interpretation and implementation of the laws and regulations. These Directives regulate various matters, such as authorisations and compliance, the criteria for undertakings to qualify as "start-ups", national lottery terms, and gaming premises, amongst others.
Since the implementation of the 2018 consolidation of gaming legislation, the Malta Gaming Authority has issued the following directives and rulings:
- 2018: the Start-Up Undertakings Directive, the Player Protection Directive, the Gaming Authorisations and Compliance Directive, the Directive on the Calculation of Compliance Contribution, and the Alternative Dispute Resolution (ADR) Directive.
- 2019: the National Lottery (Continuation of Concession and Licence Terms) Ruling, the Gaming Premises Directive, the De Minimis Games Directive, and the Gaming Devices Ruling.
Online betting, bingo, casino, lotteries, fantasy sports, poker and social gaming are all permissible and regulated. Therefore, a licence is required in order to provide or supply any of the above games, with the exception of social gaming. While skill games may be offered without the need to obtain a licence, the MGA distinguishes skill games from controlled skill games. This was the case, for example, with respect to fantasy sports, where the MGA deemed this activity to be a controlled skill game subject to a licensing requirement. To date, fantasy sports is the only public ruling the MGA has issued in relation to controlled skill games, as further elaborated in 12.3 Fantasy Sports. The MGA takes such decisions on a case-by-case basis, and a public ruling is issued to inform the public that a particular game is deemed to be a controlled skill game and subject to a licensing requirement.
Land-based betting, bingo, casino, lotteries and poker are also permissible and regulated. Therefore, a licence is required in order to provide or supply any of the above, with the exception of social gaming. While skill games do not require operators to obtain a licence, the MGA has classified fantasy sports as a controlled skill game, and therefore operators who provide these games must do so under a valid licence, as described above.
A licence is not required for games classified as low risk games by the MGA. In such cases, a low-risk permit would be required. Such permit is only issued for a single event, expires as soon as the event is concluded, is non-transferable unless the MGA's prior approval is obtained, and is non-renewable. Examples of low risk games include non-profit bingo games where the stake does not exceed EUR5 per player and more than 90% of the net proceeds go to a good cause (charity, sports, education, etc).
Furthermore, the operation of gaming premises and gaming devices, casinos, betting shops and other gaming premises, as well as lottery tickets and sale venues, fall within the scope of the gaming regulations and therefore must be licensed and approved by the MGA.
The key legislation that applies to the gambling sector is as follows:
- the Gaming Act – Chapter 583 of the Laws of Malta;
- the Responsible Gaming Fund Regulations – Subsidiary Legislation 583.01 (not yet in force);
- the Gaming Malta Fund Regulations – Subsidiary Legislation 583.02;
- the Gaming Licence Fees Regulations – Subsidiary Legislation 583.03;
- the Gaming Definitions Regulations – Subsidiary Legislation 583.04;
- the Gaming Authorisations Regulations – Subsidiary Legislation 583.05;
- the Gaming Compliance and Enforcement Regulations – Subsidiary Legislation 583.06;
- the Gaming Premises Regulations – Subsidiary Legislation 583.07;
- the Gaming Player Protection Regulations – Subsidiary Legislation 583.08;
- the Gaming Commercial Communications Regulations – Subsidiary Legislation 583.09;
- the Gaming Tax Regulations – Subsidiary Legislation 583.10;
- the Social Causes Fund Regulations – Subsidiary Legislation 583.11;
- the Retention of Data (Malta Gaming Authority) Regulations – Subsidiary Legislation 583.12;
- the Prevention of Money Laundering Act – Chapter 373 of the Laws of Malta;
- the Prevention of Money Laundering and Funding of Terrorism Regulations – Subsidiary Legislation 373.01;
- the Consumer Affair Act – Chapter 378 of the Laws of Malta;
- the Electronic Communications (Regulation) Act – Chapter 399 of the Laws of Malta;
- the Data Protection Act – Chapter 586 of the Laws of Malta;
- the Prevention of Corruption in Sport Act – Chapter 593 of the Laws of Malta; and
- the Requirements as to Advertisements, Methods of Advertising and Directions applicable to Gambling Advertisements – Subsidiary Legislation 350.25
Definition of Gambling
The activity of gambling falls within the operative term 'gaming', which is used in Maltese legislation. 'Gaming' is defined as "an activity consisting in participating in a game, offering a gaming service, or making a gaming supply." A “game” is defined to mean "a game of chance or a game of skill."
A “game of chance” means "an activity the outcome of which is determined by chance alone or predominantly by chance, and includes but is not limited to activities the outcome of which is determined depending on the occurrence or outcome of one or more future events.”
A “game of skill” means an activity the outcome of which is determined by the use of skill alone or predominantly by the use of skill, but excludes a sport event, unless otherwise established by or under the Gaming Act.
Definition of Land-Based Gambling
The general definition of 'gaming' applies to all gambling/gaming, regardless of the channel of distribution adopted by the operator to reach its consumers. There is no distinction between online and land-based gaming, and thus the general definition also refers to land-based gambling.
Definition of Online Gambling
The general definition of 'gaming' applies to all gambling/gaming, regardless of the channel of distribution adopted by the operator to reach its consumers. There is no distinction between online and land-based gaming, and thus the general definition also refers to online gambling.
The major offences under the Gaming Act include the provision of a service or supply without the necessary authorisation, aiding or abetting such provision, and failing to effect payments to the MGA. Other key offences arising under other applicable laws include money laundering offences and data protection offences, both of which are directly relevant for gaming operators, both online and land-based. Sanctions also apply to lesser offences, such as the breach of or non-compliance with other areas of applicable legislation, such as a breach of advertising regulations or compliance breaches.
Penalties for Unlawful Gambling
Any person found guilty of undertaking unlawful gaming activity is liable to a fine of between EUR10,000 and EUR500,000, or to imprisonment for up to five years, or to both fine and imprisonment. As an alternative to criminal court proceedings, the MGA may, by way of agreement with the offender, and subject to the rectification of the breach, impose a penalty of EUR500,000 for each infringement, or a sum of EUR5,000 for each day of infringement or non-compliance or any other administrative sanctions. Once such agreement is concluded, the offender's criminal liability under the Gaming Act will be extinguished. The agreement will only be effective if it is accompanied by the payment of the sum due or the provision of sufficient security for its payment.
In addition to any penalty outlined above, any machine or other device and any money used in the commission of the offence will be seized and forfeited in favour of the MGA, and may be appropriated in favour of the Malta Gaming Fund.
The Responsible Gaming Fund Regulations, Subsidiary Legislation 583.01, have been published but are not yet in force.
Licensing and Regulatory Framework
The Gaming Act established the main regulatory body responsible for the governance of all gaming activities in Malta, known as the Malta Gaming Authority (MGA). Its main functions include the issuance of licences, approvals, certificates and recognition notices, as well as the monitoring of the conduct of operators in the field. The MGA is also responsible for preventing, detecting and combatting criminal activity in the gaming sector, and for ensuring that games are operated and advertised fairly and responsibly.
The regulatory approach adopted by the MGA is risk-based, and prescriptive.
Types of Licences
Any person providing or carrying out a gaming service or providing a critical gaming supply from Malta or to any person in Malta, or through a Maltese legal entity, must possess a valid licence or be explicitly exempt from the requirement of a licence. Every game offered from Malta or in Malta must be approved or otherwise recognised by the MGA.
The MGA may issue the following licences:
- a Gaming Services Licence: business to consumer (B2C) licence to offer or carry out a gaming service;
- a Critical Gaming Supply: business to business (B2B) licence to provide or carry out a critical gaming supply; and
- a Corporate Group Licence: B2B or B2C corporate group licences may be issued to a corporate group that includes more than one company within its structure. However, this may be availed of where the entities concerned provide critical gaming supplies solely to other entities within the same group. In such instances, an additional B2B licence will not be required. However, if entities within the B2C corporate group licence provide critical gaming supplies in or from Malta to entities outside of the group, a separate B2B licence would be required. The entities that can be covered by the corporate group licence must be established in Malta or another EU/EEA jurisdiction.
The B2C licence may cover any one or more game types, as outlined in 6.1 B2C Licences.
In instances where a game may be categorised under one or more of the game types, the MGA has complete discretion to categorise the game under the specific type it believes closest reflects the nature of the game.
Availability of Licences
The MGA will only grant a licence to operators who have passed its rigorous vetting process, which includes demonstrating that the particular operator is able to meet the MGA's requirements, and that all the individuals involved, right up to the ultimate beneficial owners, are fit and proper.
Duration of Licences
The standard duration of a licence is ten years, whilst a Recognition Notice is valid for one year. However, licences that require government concessions, such as for the operation of land-based casinos and the island's national lottery, would be granted for ten years or such shorter period for which the concession is valid.
Application requirements are almost identical for both remote and land-based operators. Prospective licensees must demonstrate that they are financially sound and capable of meeting the MGA's requirements, and that they will comply with the applicable legislation. In this respect, all directors and persons performing key roles in the gaming company must be vetted by the MGA in order to ensure that they are fit and proper, based on a detailed disclosure set out in a prescribed form referred to as the Personal Declaration Form, which must be submitted through the MGA's portal together with all supporting documentation. Furthermore, direct and indirect shareholders holding more than 10% in the applicant company are subject to the same strict vetting process.
The MGA issued a Directive on Start-up Undertakings in which any undertaking that qualifies as a start-up would be subject to less stringent compliance obligations for a certain amount of time. The qualifications to be deemed a start-up have recently been amended as per Legal Notice 266 of 2019, wherein an undertaking must not have generated more than EUR10 million of revenue in the 36 months prior to the application; this was previously was limited to one year. Such amendments will come into effect on 1 January 2020.
The timeframe for obtaining a new remote gaming licence from the MGA ranges between three and six months from the submission of a complete application.
Licence application fees vary according to the licence/authorisation being applied for. A fee of EUR5,000 is payable to the MGA upon the submission of any application for a B2C or a B2B licence, for the renewal of such a licence or for a recognition notice. An application for a material supply certificate and requests for the addition of a new gaming vertical, the addition of a new delivery channel or major changes to an operator's software and infrastructure involve a fee of EUR1,000.
Ongoing Annual Fees
Any person in possession of a gaming service licence issued by the MGA must pay a licence fee of between EUR10,000 and EUR35,000, depending on the class of licence held and the annual revenue levels. The fees are established in the Gaming Licence Fee Regulations.
The operation of gaming premises and gaming devices, casinos, betting shops and other gaming premises, as well as lottery ticket and sale venues, falls within the scope of gaming regulation. These activities must be licensed and approved by the MGA, and are not subject to any prescribed limitation in their number, although their physical location is subject to several rules. For instance, any person renting out or allowing another person to use the premises as a gambling premises must ensure that the lessee is in possession of a valid approval or licence. Moreover, gaming premises operators are expected to make the possibility of self-exclusion readily available to every person, and must provide assistance and guidance to any person who wishes to exclude himself or herself. Casino licences are issued by the MGA, but would be dependent on the applicant holding a concession from the government for such operation.
There is no limit on the total number of gaming premises for the Maltese islands. However, gaming premises are subject to several criteria obliging them to be located at pre-set minimum distance away from schools, places of worship, and other gambling premises.
There are also restrictions regulating the number of gaming devices within the licensed gaming premises to one gaming device per two metres squared, and a maximum of ten gaming devices in any gaming premises.
Recent or Forthcoming Changes
There are no imminent legislative or regulatory changes expected in the land-based gaming sector.
A B2C licence is a licence to offer or carry out a gaming service, and can cover any one or more of the following gaming types:
- Type 1 Gaming Services, which include games of chance played against the house, the outcome of which is determined by a random number generator, and which include casino-type games such as roulette, blackjack, baccarat, poker played against the house, lotteries, secondary lotteries, and virtual sports games;
- Type 2 Gaming Services, which include games of chance played against the house, the outcome of which is not generated randomly, but is determined by the result of an event or competition extraneous to a game of chance, and by which the operator manages its own risk by managing the odds offered to the player;
- Type 3 Gaming Services, which include games of chance not played against the house and in which the operator is not exposed to gaming risk, but generates revenue by taking a commission or other charge based on the stakes or the prize, and include player versus player games such as poker, bingo, betting exchange, and other commission-based games; and
- Type 4 Gaming Services, which include controlled skill games such as fantasy sports.
A gaming service is defined as the availability for participation by players as an economic activity, whether directly or indirectly, and whether alone or with others. Thus, as the name suggests, a B2C licence would involve those services that are targeted towards prospective players.
B2B Licences (Suppliers, Software, etc)
A B2B licence is also referred to as a critical gaming supply licence, and is a licence to provide or carry out a critical gaming supply that is either indispensable in determining the outcome of a game or games forming part of a gaming service, and/or is an indispensable component in the processing and/or management of essential regulatory data. This is to be distinguished from a material gaming supply, which does not require a B2B licence but a certificate from MGA.
There are currently no measures in place to regulate the use of affiliates. In accordance with Directive 3 of 2018 (the Gaming Authorisations and Compliance Directive), outsourcing service providers such as affiliates shall be deemed to be acting for and on behalf of the licensee. In such cases, the licensee is responsible for the affiliate's actions insofar as the activities concerned are covered by the licence issued by the MGA.
There are currently no measures regulating requirements that apply to the use of white-label providers. Similar to affiliates, white-label providers are deemed to be intermediaries. In accordance with Directive 3 of 2018 (the Gaming Authorisations and Compliance Directive), outsourcing service providers such as white-label providers are deemed to be acting for and on behalf of the licensee. In such cases, the licensee is responsible for the actions of the white-label providers insofar as the activities concerned are covered by a licence issued by the MGA in favour of that white-label service provider.
Recent or Forthcoming Changes
There are no imminent legislative or regulatory changes expected in the online gaming sector.
There are currently no technical measures, such as IP blocking, in place to protect consumers from unlicensed operators.
Maltese gaming legislation and regulations provide for a number of responsible gaming requirements, aimed at protecting minors and vulnerable persons from unscrupulous operators. In addition to Directive 2 of 2018 (the Player Protection Directive), the MGA imposes requirements ranging from strict advertising and marketing regimes to the possibility of self-exclusion.
Gambling Management Tools
Gambling management tools adopted by the MGA are focused principally on obligations placed on operators to assist players with determining whether or not they are problem gamblers, making leaflets or other material regarding organisations that assist problem gamblers readily available to players, and ensuring that there are procedures in place to enable players to exclude themselves from playing for a definite or indefinite period of time.
In March 2019, the MGA issued a Preliminary Market Consultation (PMC) document to request information pertaining to the possibility of implementing a Unified Self-Exclusion System to be applied to the regulated gaming industry in Malta, across gambling operators, irrespective of the channel; however, there is no clear indication as to whether or when such a system may be implemented.
The Prevention of Money Laundering and Funding of Terrorism Regulations ("PMLFTR") oblige online gaming operators to conduct high levels of customer due diligence, with the risk of steep penalties for non-compliance.
The Financial Intelligence Analysis Unit ("FIAU") is the government agency responsible for the combat of money-laundering and terrorist finance, and has published two separate sets of implementing procedures in terms of the PMLFTR, applicable to both land-based casinos and the remote gaming sector. These implementing procedures focus on specific areas of the PMLTFR and their application at an industry-specific level, in order to highlight those aspects of money laundering prevention that are of most relevance to the industry, and to ensure they are understood and interpreted consistently by all Maltese licensees or other licensed operators based in Malta.
The EU's Fourth Anti-Money Laundering Directive ("4AMLD") classifies gambling operators as "subject persons", which means that gaming operators are required to comply with stringent reporting and procedural obligations. The 4AMLD was transposed into Maltese law and gaming operators became subject to risk-based AML obligations on 1 August 2018.
The 4AMLD takes the form of a minimum harmonisation directive, and sets out minimum standards that must be met by transposing national legislation, while affording Member States the option to exceed this standard and vary in the implementation thereof. Whilst the 4AMLD lays down an obligation for B2C operators to apply customer due diligence measures for single transactions amounting to EUR2,000 or more, Malta applies this threshold on the basis of a rolling period of 180 days.
Further to the transposition of the 4AMLD, an Anti-Money Laundering Unit was set up within the MGA, with the purpose of conducting AML/CFT supervisory assessments of licensed operators through inspections carried out both on-site and off-site. Reports of findings are subsequently forwarded to the FIAU.
Any operator found guilty of the offence of money laundering could be exposed, on conviction, to a fine not exceeding EUR2.5 million, and its officers could be exposed to imprisonment for a period not exceeding 18 years, or to both fine and imprisonment. The Court may, inter alia, also order the forfeiture to the Government of the proceeds or of such property the value of which corresponds to the value of such proceeds, whether such proceeds have been received by the person found guilty or by the company.
The MGA is the regulatory and supervisory authority for all gaming-related matters, including advertising.
Definition of Advertising
Advertising is defined as text, images, sound or any other medium transmitting information that is designed to promote – directly or indirectly – the goods, services, image or brand of a person pursuing a licensable gaming activity; for the avoidance of doubt, this also includes product placement and any emerging advertising techniques.
Key Legal, Regulatory and Licensing Provisions
The key provisions can be found in the Gaming Commercial Communications Regulations, 2018, Legal Notice 247 of 2018 and Subsidiary Legislation 350.25, entitled "Requirements as to Advertising, Methods of Advertising and Directions applicable to Gambling Advertisements". The MGA has also issued the Commercial Communications Guidelines (the "Guidelines"), as part of its mission to place player protection and responsible gaming at the top of its regulatory agenda. These legal instruments lay down the basis for acceptable advertising practices in respect of gaming services.
In addition, the MGA has set up a Commercial Communications Committee, whose role will be to review commercial communications issued by gaming operators in Malta and brought to its attention, and assess any possible breaches.
Restrictions on Advertising
The prohibitions and restrictions on advertising generally provide that advertisements must not portray, condone or encourage behaviour that is criminal or socially irresponsible or that could lead to financial, social or emotional harm, or directly or indirectly encourage anti-social or violent behaviour. Specifically, this includes prohibitions in relation to suggestions that gaming can be a resolution to social, educational, professional or personal problems, an alternative to employment, a solution to financial concerns or a form of financial investment.
The regulations also prohibit the portrayal of gaming as socially attractive, or suggestive of enhancing personal or professional qualities or a way of gaining control, superiority, recognition or admiration. The portrayal of gaming in the context of toughness/resilience, or as being indispensable or taking priority in life is also illegal. Furthermore, advertisements must not suggest that solitary gaming is preferable to social gaming, nor that skill can influence the outcome of a game that is purely a game of chance, and cannot provide false information about the chances of winning, or exploit cultural beliefs or traditions about gaming or luck. In addition, operators cannot make reference to instantly available consumer credit services, or other ways of providing credit to players.
The sending of unsolicited communications is prohibited, as is the sending of solicited communications to persons who have requested to stop receiving such communications, or who are undergoing a period of self-exclusion.
Advertisements must clearly display the name of the relevant gaming company responsible for that advertisement, and a reference must be made in the advertisement to the fact that the company holds a valid licence issued by the MGA or another licensing authority, duly recognised in Malta. Advertisements made via social media account portals held by the gaming company itself or third parties are subject to the same restrictions.
Gaming advertisements cannot be issued or distributed in any public places or on any means of public transport in Malta, but this does not apply to advertisements displayed or broadcast within authorised gaming premises, locations frequented mainly by tourists including airports, seaports, hotels and holiday complexes (excluding bars and restaurants), conferences/events specifically organised by the gaming sector, the premises of operators, or newspapers or magazines, amongst others.
The regulations also provide that educational, responsible gaming messages are to be prominently displayed within all advertisements, and that advertisements must not be directed towards minors or vulnerable persons, must not encourage these persons to play a game, must not feature minors or appeal to these persons in any way, nor exploit the susceptibilities, aspirations, credibility, inexperience or lack of knowledge of these persons, nor present gaming as a sign of maturity or move to adulthood.
If the MGA determines that a particular advertisement is in breach of legislation, it may order its modification, retraction or termination. The MGA may also take any administrative action it deems necessary, including the issuance of sanctions. Furthermore, where the MGA deems it necessary, it may also instruct the licensee to suspend the advertisement until it reaches a final decision.
The Court of Magistrates in its criminal jurisdiction is the court competent to take cognisance of any offences committed in this respect. However, criminal proceedings cannot be undertaken without the sanction of the MGA. The prescriptive period in relation to actions in breach of advertising regulations is six years.
In relation to fines, the MGA may issue an administrative penalty not exceeding EUR25,000 for every breach, and/or an administrative penalty not exceeding EUR500 for each day during which the breach persists. The MGA is free to publish the sanction issued, should it be of the opinion that lack of disclosure would be detrimental to the interests of the players, or cause disproportionate damage to the parties involved.
Acquisitions and Changes of Control
Article 37(2) of the Gaming Authorisations and Compliance Directive requires operators licensed by the MGA to notify the Authority no later than three working days after any change of 10% or more in direct or indirect qualifying shareholding within the licensee. All the documentation required by the Authority as part of the notification process for the approval of the new qualifying shareholder must be submitted to the Authority within 30 days of the change in shareholding taking effect. Changes in shareholdings in a licensee representing less than 10% of the operator's issued share capital, either directly or indirectly, will not require the Authority's approval.
If the Authority takes the view that the change in direct or indirect shareholding has the effect of prejudicing the fitness and propriety of the licensee, or otherwise hinders its suitability for a licence, it may order the licensee to reverse the transaction, reverting to the status quo ante within a timeframe established by the Authority.
Change of Corporate Control Triggers
Gaming licences are not transferable. However, in the case of a change of corporate control, the continuance of the licence will be subject to the MGA’s vetting and approval of the new owners, and of any incoming directors and/or key personnel.
Passive Investors Requirements
Passive investors are caught by the general change of control rules outlined above.
The enforcement measures that the MGA can adopt are as follows:
- an order directing the authorised person to do something, or to refrain from doing something, or to otherwise correct its conduct and/or operations;
- a warning, directing the authorised person to do, or refrain from doing, something in the future;
- adding, removing or amending conditions attached to the authorisation held by the relevant authorised person;
- in the case of a breach that does not constitute an offence under the Gaming Act, imposing an administrative penalty in terms of Article 25(3) of the Gaming Act;
- in the case of a breach that does constitute an offence under the Gaming Act, filing a report to the Executive Police for the commencement of criminal proceedings; and
- suspending or cancelling a licence.
The MGA may impose fines for non-compliance in three main scenarios:
- in order to ensure that the licensee rectifies any default;
- in order to deter future non-compliance and thus ensure that Maltese licensees uphold high standards of behaviour consistent with regulatory requirements; and
- for the purpose of ensuring that any financial gain that the licensee may have made through non-compliance is eliminated.
In addition, the Third Schedule of the Gaming Act outlines a list of criminal offences, including the provision of a service or supply without the necessary authorisation or aiding or abetting such a provision, or failing to effect payments to the MGA when lawfully due. Any person found guilty of a breach stipulated in the Third Schedule is liable to a fine of between EUR10,000 and EUR500,000, or to imprisonment of up to five years, or to both fine and imprisonment. The Court of Magistrates in its criminal jurisdiction shall be the competent court to take cognisance of offences against the Gaming Act or any regulations made thereunder.
In the case of a breach of any other regulatory instrument that is not outlined in the Third Schedule to the Gaming Act, the MGA may impose an administrative penalty of up to EUR25,000 for every breach or non-compliance, or an administrative penalty of up to EUR500 for each day on which such breach persists.
All enforcement actions taken by the MGA in accordance with the Gaming Act and its relevant regulations and directives are listed on the MGA's official website, through an Enforcement Register.
Financial penalties are enforced as certain, liquid and due money claims against the licensee, through the normal enforcement procedures available under Maltese law, and generally consist of the filing of a claim by way of special summary proceedings in the Maltese Courts, and the issuance of the relevant precautionary warrants against the assets of the licensee to secure the sum due pending the outcome of the judgment. Once a favourable judgment is obtained by the Authority, an executive warrant is issued against the licensee to recover the sum due, together with any relevant interest and eligible legal costs.
In September 2018, the MGA signed an international declaration expressing concern regarding the risks posed by the blurring of clear lines of demarcation between gambling, gaming and other forms of digital entertainment, such as video games. The MGA was joined by the gambling regulators of 15 other European and American States and territories, namely Latvia, the Czech Republic, the Isle of Man, France, Spain, Jersey, Gibraltar, Ireland, Portugal, Norway, the Netherlands, the United Kingdom, Poland, Austria and the State of Washington. In doing so, the regulators of these 16 territories committed themselves to working together to analyse the characteristics of video games and social gaming more thoroughly, and called for a more constructive dialogue with the responsible representatives of the video games and social gaming industries.
In May 2019, Malta launched a 'Vision for video game Development and Esports', and efforts are underway to help attract international eSports tournaments to Malta. A Memorandum of Understanding ("MOU") was signed between Electronic Sports League ("ESL") and the Government of Malta through the GamingMalta Foundation. The MOU serves as a notice of intent for both parties to develop a multi-year programme to help the development of the local eSport ecosystem, the organisation of local and international events, and the sharing of expertise in the sector.
In August 2018, the MGA defined fantasy sports as a controlled skill game, requiring a licence in terms of the Gaming Authorisations Regulations (SL 583.05). The MGA defined fantasy sports as a contest offered by means of a distance communication, wherein players commit a consideration of monetary value, whether in the form of a stake, a periodic subscription or the purchase of in-game items, which provides an advantage to the player, to compete against other players for the possibility to win a prize of money or money's worth. The outcome of a fantasy sports contest shall be determined by the accumulation of statistical results of the performance of a number of individuals competing in actual sporting events. The winning outcome must be determined predominantly through the skill or knowledge of the player.
There are no recent trends or developments to report regarding skill gaming.
The MGA launched a Guidance Note on the use of Innovative Technology Arrangements ("ITAs") and the acceptance of Virtual Financial Assets ("VFAs") and Virtual Tokens through the implementation of a "Sandbox Environment" with effect from 1 January 2019. The Sandbox Environment was set out with two phases:
- the first phase established the possibility for authorised persons to be allowed to accept VFAs as a means of payment. This was launched in October 2018 and became effective on 1 January 2019;
- the second phase was introduced in September 2019, wherein the MGA will be accepting applications for the use of ITAs including Distributed Ledger Technology ("DLT") platforms and smart contracts. ITAs shall be required to be audited by auditors registered with the Malta Digital Innovation Authority ("MDIA") in terms of the Innovative Technology Arrangements and Services (ITAS) Act (Chapter 592 of the Laws of Malta), and shall only be accepted by the MGA if the audit report consists of a positive opinion and the MGA is satisfied that the regulatory requirements shall be adhered to by the authorised person.
The MGA shall be extending the duration of the Sandbox Regulatory Framework until 31 December 2021.
As far as is known, there has been little take-up of this framework by operators, and at the time of writing there has been no official information released by the MGA in this regard.
A comprehensive reform took place in August 2018, and no additional legal reform initiatives are expected.
Tax Rate by Sector
Any gaming service subject to the requirement of a licence, carried out from Malta or to any person in Malta, is subject to a gaming tax calculated at the rate of 5% on the Gross Gaming Revenue ("GGR") generated from said gaming services during the relevant tax period. This tax is levied on the gaming revenue, as defined in the Gaming Tax Regulations, 2018, Legal Notice 248 of 2018, generated by operators from end customers located in Malta.
There is also a gaming levy imposed on gaming devices, calculated on the aggregate gaming revenue generated during the relevant tax period. The rates of this gaming levy depend on the type of gaming service offered. The gaming levy imposed in relation to gaming devices deployed within gaming premises in the provision of type one and/or type two gaming services is 30%, while that imposed on gaming devices deployed within gaming premises in the provision of type three and/or type four gaming services is 12.5%. The levy on gaming devices deployed within controlled gaming premises in the provision of either type one, type two, type three and/or type four gaming services is 15%.
It should also be noted that operators are obliged to pay a compliance contribution to the MGA, as well as other applicable licence fees. The compliance contribution is determined by the gaming revenue generated by the licensee under its MGA licence, and is calculated in accordance with the Gaming Licence Fees Regulation based on the type of gaming service or critical gaming supply offered. It is important to clarify that a Maltese company holding licences in several jurisdictions would not account for the compliance contribution imposed by the MGA for those activities conducted under their non-Malta licences.
Player winnings are generally exempt from taxation in Malta, provided that the gaming activities are not undertaken with such frequency by the player as to be deemed to constitute a trade, business, profession or vocation.
Maltese resident and domiciled companies are subject to tax on their worldwide income, minus permitted deductions, at the standard corporate tax rate of 35%. However, based on Malta's full-imputation system, upon the receipt of a dividend, shareholders of a Maltese company may claim a refund of all or part of the tax paid in Malta at the level of the company, depending on the type and source of the income from which such dividend was paid. Specific tax advice should be obtained in each case.
Value Added Tax ("VAT") is applied at the standard rate of 18% on every taxable supply of goods, services or importation, with lower rates applicable to certain sectors.
Two sets of guidelines have been published by the Maltese Government in relation to the previous gambling VAT exemption. These guidelines became effective on 1 January 2018 and provide a specific list of exemptions applicable to particular gaming activities. Therefore, in contrast to the previous regime (where a blanket exemption was applicable to all gaming activities), VAT will apply under the current framework, unless the particular gaming activity is specifically exempt. The VAT exemptions applicable to the respective gaming activities are exemptions without credit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.